It’s hard to imagine that a superpower like the USA could go broke in the same way as a banana republic like Venezuela did. But at the same time it is hard to see how the U.S. Federal Government’s 19 trillion dollars in debt, and growing, is going to have a good ending. The money is running out already in Puerto Rico and serves to give us a preview of how an economic collapse could play out on the mainland.
Examples Of Apocalypse – Puerto Rico
A reader writes:
I feel logically that a collapse has to happen- IS already happening in so many ways. But like waves in a pond, the ramifications haven’t hit the middle-class social circles I frequent. Honestly I just can’t see it happening any time soon, it feels like this ridiculous construct could go on for decades, grinding everyone down before the powder keg ignites. I physically feel that there has to be a cleansing, in the form of contraction and (probably unavoidable) chaos. But it still feels calm, the atmosphere here is peaceful and safe.So my main question is – Is it even possible to have a resource shortage in the same way as the past? I see the shortage being in social services, personal safety and opportunities that could/will trigger K here. Mad Max just seems to far fetched to happen in this day and age.
I know how strange it feels, but I think Mad Max is accurate, though very smart people are coming up with brilliant solutions to delay it, and doing so quite effectively, so exact predictions of when are difficult.
Puerto Rico’s power company on Thursday cut off electricity to a hospital over nearly $4 million in unpaid bills, part of a stepped-up effort by the heavily indebted agency to collect money amid the island’s economic crisis.The Electric Power Authority said it waited for surgeries to end before pulling the plug at the Santa Rosa Hospital in the southern coastal town of Guayama…The power company is $9 billion in debt and has been pursuing people and businesses that owe it money, joining other government agencies in a similar crackdown.
I still can’t wrap my head around this. When have we ever seen a hospital shut down by having its power killed, and no entity has intervened to stop it? And yet, that one failure is the tip of the iceberg in that system. That power company could be denied fuel any day now, if its supplier judges that with 9 billion in debt, they aren’t going to be paying. Then the lights go out. Then the fuel company gets denied fuel, because who knows how many billions it owes, and now you are back to donkeys and wagon carts. To say nothing of what that would do to manufacturing and the rest of the economy.
That is the transition from the rabbit’s free and easy attitude to resources which fosters a debt economy, and the wolf’s aggressive competitiveness, which would sooner deny the product and screw everybody, than risk supplying it and getting stiffed.
We still have yet to see one of these profligately spending nations really have to contend with shortage, because there is always a larger entity to bail them out. But this is coming to the first world, and when it hits there, there will be no bailouts. Making it worse is the present use of debt, which will keep the spending rolling fast and furious as we approach the precipice.
Without debt, the hospital above would have gradually cut its electrical consumption. It could have reprioritized spending allocations to keep the electricity flowing. It could even have raised prices to keep the lights on. By using debt, it did none of that, it amassed a massive debt it will have to service on top of expenses now, and it placed the supplier in a position of having to cut all power, all at once. That is what we will see when the debt spending catches up to us, and it will hit private and public sectors all the same.
I think a real shortage is likely because particularly hard hit will be Big Agra. Over the last few decades, agriculture has consolidated, and the majority of it has become a mass production system which is enormously dependent on debt and complex supply lines.
Rather than keep cash on hand to buy each year’s supplies and turn it into food, Big Agra, like most massive conglomerates, keeps rotating lines of credit with banks. It takes a few hundred million in loans, buys mass quantities of fertilizer, pesticides, fungicides, herbicides, licenses for genetically modified crops, and other necessities. It then gives that to farmers who use the supplies to intensively grow crops in soil which no mere mortal could ever get anything to grow in reliably. They produce food, which is sold. The money made is taken in, the bank is paid off, the profits are taken, and the process repeats.
Now normal agriculture is difficult under normal circumstances, but mass agriculture is worse. Taking large quantities of weaker domesticated organisms, designed for optimal conditions, packing them together and growing them to harvest without a pathogen sweeping through them, or a weather event wiping them out, or a mistimed application screwing everything up is hard. Even with a full supply of fertilizers, pesticides, disease treatments, and herbicides to keep the invasive weeds at bay, you can have a crop failure. Interrupt even one aspect of that, either due to a supply chain failure, or a debt issue, and you could see massive crop failures.
If the debt which already is integral to that system grows toxic, or you have bank failures, watch out. You will have a food shortage, just like this hospital was shuttered by the electric company. That entire system of mass agriculture is an amazingly fragile mechanism of complex moving parts.
Given that the savages in the cities lack both the means and the ability to raise their own food, I would expect that any trucks carrying some of the scarce food into the city would quickly be set upon by swarms of gibmedats, and very soon food deliveries into cities would be few and far between.
When you look at the whole picture, it is astonishing. Fractional banking systems which have given the depositor’s money to other people, and which won’t have nearly enough cash to cover accounts. A government that will have gone bankrupt, and which no sane person will buy bonds from, cutting the debt spending cold. A heavily consolidated economic engine wholly dependent on a banking system destined to fail. Mass private-sector joblessness just as the government lays off most of its workers, a likely food shortage, and a likely last desperate grab of any privately-owned resources the government can find, to try and stave off the calamity a little longer.
As I look at it, I feel the cognitive dissonance you do. I think what is happening is that my logic circuitry is seeing the enormity of it all, and it is tapping my amygdala, calling on it to produce a commensurate emotional backdrop to the mental picture. The amygdala however, has never seen anything like that, so what it returns as an emotion clearly doesn’t fit. The logic center senses that, and the result is a dreamy, unreal quality to the picture, and a sense of cognitive dissonance – something feels wrong. Ask me to picture Christmas morning emotionally, and I can do that. Ask me to picture a locker-room before a sporting event, and I can do that. Ask me to picture a funeral, and I can do that. But not this. The picture is just off.
I don’t think it is wrong, I just think we have yet to see how society responds when each man enters high amygdala, grows competitive, and begins to worry about whether he is being screwed more than he worries about whether he is being liked. Right now, you can always find somebody willing to cough stuff up to keep the resource glut booming. Once men become competitive, nobody does anything for free, and they will not provide services until you pay the full going rate. If you can’t pay, you will go without, and that will just be how it is. No farmer will continue to produce crops until he has the money for them, he won’t ship them on faith, and if the money isn’t there, there will be no crops. If there are no crops, there will be a bloom of man’s darker nature among many, and I expect robbery will become much more common, especially among Bernie’s more vibrant supporters. It only seems weird because we have never seen this before.
However, if you think logically that it can happen, rejoice. You are probably smart enough you will survive it.
But there will be no guarantees.
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